Once the company was established, there
was growing demand from small coastal settlements for Northern Steam Ship
Company steamships to call at their wharves. For the first three years the
Company grew in stature and reputation and sought to expand its fleet.

In 1883 the Company decided to purchase
new steamers intended for the Tauranga, Russell and Auckland trade and Captain
McGregor was sent to Britain to make arrangements for building the new vessels.
In 1884 the Company took delivery of CLANSMAN, which cost £20,000, and
GAIRLOCH.

The CLANSMAN at Kawau 1914
Photograph: Furniss collection.

Despite growing demand and
expansion of the Company's fleet, the financial
situation was not very encouraging. The Company was
spending money to build up its fleet and expand its
services. The older vessels in the fleet experienced
machinery breakdowns and there were several accidents,
all of which caused delays in the timetable and cost the
Company money. Also, the small ports served by the
Company were not fully developed and the amount of trade
was small and therefore did not provide much profit. The
Depression of the 1880s affected all industries
including the timber industry, which nearly collapsed
and was one of Northern Steam Ship Company's major
sources of trade.